Evidence Code Sections 1115 through 1128 set out a strict set of rules concerning confidentiality standards in the course of or for the purpose of mediation.

And from time to time, the Court of Appeal has crafted judicial exceptions to the statutes. And each time that it has done so, the California Supreme Court has reversed the lower court, steadfastly maintaining that there are no exceptions to the statutory scheme. See Foxgate Homeowners Association v Bramalea California, Inc., 26 Cal 4th 1 (2001); Rojas v Superior Court, 33 Cal 4th 407 (2006); Simmons v Ghaderi, 44 Cal 4th 570 (2008)

 
One can argue that each of these decisions prevented a legitimate issue from being determined or adjudicated. In  Foxgate, a mediator was prevented from reporting to the court that a party's attorney was acting in bad faith in a court connected mediation. In Rojas, tenants suing the owner of a dilapidated apartment complex were prevented from introducing revealing photographs of the premises because the photographs had been produced in connection with the mediation of a lawsuit not involving the tenants. In Simmons, a party who accepted a settlement offer from the defendant's insurer was prohibited from enforcing the settlement because the defendant had not signed the agreement. Had the defendant signed the agreement, it would have removed the agreement from the confidentiality restraints of the statutory scheme, pursuant to Section 1123 of the Evidence Code.

   
The mediation community, by and large, has applauded the Supreme Court decisions. Many private mediators enjoy a substantial success rate. The success rate in court connected mediations is somewhat lower than private mediations, but any case that is settled is one less case on the court's docket. The mediator's skill is no doubt a major factor in achieving a successful outcome, but the fact that mediations are "confidential" is a large ingredient in that achievement. Thus, the prohibition of judicially created exceptions to confidentiality was considered to be more important than an occasional prevention of the determination of a legitimate issue in a particular litigation. Bear in mind also that the claims that were barred in the three aforementioned cases were only allegations. In Foxgate, the attorney purportedly acting in bad faith did not want to mediate because he was about to file a motion for summary judgment. In Rojas, the defendant denied that it had used the photographs in the prior mediation for the sole purpose of preventing their introduction in the tenants' lawsuit. In Simmons, the party who purportedly withdrew from the settlement agreement claimed that she had withdrawn the insurer's authority to settle because she realized that a settlement in the amount purportedly agreed upon would negatively impact her ability to obtain medical malpractice insurance in the future.

The California Supreme Court, in Cassel v Superior Court, 51 Cal 4th 113 (2011), has once again stalwartly supported the concept of confidentiality in mediation. But this case may have far greater ramifications than its three predecessors because the decision virtually eviscerates the ability of clients to sue their attorneys for malpractice in the course of a mediation. The prior three cases involved situations that either could be cured or were unique. In Foxgate, the court may have prevented a mediator from reporting the bad conduct of an attorney but did not prevent the adverse party from doing so. The Simmons decision did not prevent the admissibility of all settlement agreements reached in a mediation, but merely those that did not specifically state that the agreement was admissible in a subsequent court proceeding and were not executed by the parties.  Rojas involved a somewhat unique situation where a document created for the purpose of a mediation might have been of use to parties in a different litigation. But the outcome in Cassel will not only affect Mr. Cassel, but any other person who believes that  a legitimate claim lies against his or her attorney because of malpractice committed during the course of a mediation.

 
The facts alleged by plaintiff Cassel were as follows. After obtaining a license to market the Von Dutch line of clothing, he founded a company called VDO to sell the clothing. He then lost control of the company following an arbitration. His attorneys, the same who represented him in the subsequent mediation, advised him that the arbitration decision did not affect his license and so he continued to sell Von Dutch products. VDO sued him and a permanent injunction was issued after the attorneys did not appear at the hearing. Again, acting upon the advice of his attorneys, Mr. Cassel in essence ignored the injunction and so VDO brought an action for contempt. Ultimately, the parties agreed to mediate and it was apparently understood that the purpose of the mediation was to determine what VDO would pay Mr. Cassel for undisputed right to the license. Two days prior to the mediation, Mr. Cassel met with his attorneys and they agreed that he would accept not less than $2 million for the license. However, during the mediation, the attorneys informed him that VDO would not pay him more than $1.25 million and they demanded that he accept that amount. When he demurred, the attorneys falsely represented that they would negotiate a side deal that would make up most of the deficit and also falsely represented that they would waive or discount a substantial portion of their $188,000 legal fee. They also threatened to withdraw from the case if he did not settle. Mr. Cassel attempted to go out to eat and to call his family but the attorneys forced him to return to the mediation. They even accompanied him when he went to the bathroom.  After 14 hours of mediation, the attorneys presented Mr. Cassel with a complicated document which contained their desired settlement terms. At that point, Mr. Cassel, feeling ill and tired, determined that he had no choice but to sign it.

  
Mr. Cassel then sued his attorneys for malpractice. Before the trial the attorneys moved to exclude any evidence of conversations between Mr. Cassel and them that occurred in the pre-mediation session and during the mediation. All of these conversations occurred outside of the presence of the adverse parties and the mediator. The trial court granted the motion. The Court of Appeal reversed. It reasoned that the purpose of the mediation confidentiality statutes was to prevent one party from taking advantage of the other by using information gained in the mediation but not to protect communications between the mediation participant and his or  her attorney  where the attorney client privilege was waived by the filing of a malpractice suit. The court saw no conflict with its ruling and the specific language of the confidentiality statutes because it held that the client and the attorney were a single "participant" for purposes of the mediation and so there were no confidentiality restraints in their conversations, so long as the attorney client privilege was waived.

    
The Supreme Court reversed. It ruled that the attorneys and the client were separate participants. Thus, all oral and written communications between them were covered by the confidentiality statutes if they were made "for the purpose of" or "pursuant to" a mediation. It followed that, absent an express statutory exception, all discussions conducted for the purpose of the mediation, as well as all communications that took place during the mediation itself, were protected from disclosure. Plainly, such communications included those between a mediation disputant and his or her own counsel, even if the conversations did not occur in the presence of the mediator and the other disputants.

  
We will never know whether the facts alleged by Mr. Cassel were true or whether his attorneys had a good explanation for their alleged actions. What we do know is that, in the future, it will be very difficult, if not impossible, for a client to sue his or her attorney for malpractice arising from actions that occurred during the course of a mediation.

  
The three prior Supreme Court decisions had no real effect on the practice of mediation other than to give comfort to the mediation  community that our top court considered the issue of mediation confidentiality to be sacrosanct. But what will be the effect of Cassel on the future practice of mediation?

 
One effect will be what attorneys think that they need to do as a consequence of the decision. Is an attorney going to be placed in the awkward position of concurrently recommending to a client that a dispute should be mediated and warning the client that acceptance of the recommendation means that the client cannot sue the attorney if the attorney commits malpractice in the course of the mediation? Can the warning be set forth in the attorney's retention agreement? If the attorney fails to so advise the client, is that an ethical violation? If the client hears the warning or reads it in the retention agreement, will that deter the client from agreeing to mediation? If the answer to the last question is in the affirmative, that certainly is going to result in the reduction of the number of mediations that occur in California.

And what about court connected mediations? Currently, it is unclear whether courts can order parties to mediate. The Court of Appeal for the Fourth Appellate District has held that court connected mediations can only be voluntary. See Jeld Wen Inc. v Superior Court, 146 Cal App 4th 536 (2007). But the Court of Appeal for the Third Appellate District has ordered parties to mediate. See Campagnone v Enjoyable Pools & Spa Services & Repairs, Inc., 163 Cal App 4th 566 (2007). But even where court connected mediation is voluntary, the court's suggestion to mediate is often a strong one and a court order is issued after the attorneys "agree" to mediation.     What will the courts do if a party objects to a mediation after hearing his or her attorney's admonition about a future malpractice suit and the attorney tells the court that the client will not mediate because of the implications of the Cassel case?

Perhaps the Legislature can deal with the problem. One thing that the Legislature might do is to adopt the Uniform Mediation Act ("UMA"). Under the UMA, confidentiality is a waivable privilege, not an evidentiary rule. Indeed, Section 6(a)(6) of the UMA provides for an exception from the privilege where a client files a claim for malpractice. Furthermore, not only can the testimony of the complaining client be used in the malpractice suit but so can the testimony of any other party to the mediation.

There is not a high likelihood that the Legislature will adopt the UMA. However, it might be inclined to adopt a version of Section 6(a)(6). But that won't completely solve the problem. For example, Mr. Cassel claimed that he was ill. The mediator undoubtedly had an opportunity to observe him and so one side or the other might wish to call the mediator as a witness to support or dispute Mr. Cassel's claim. But Evidence Code Section 703.5 renders a mediator incompetent to testify. Should the Legislature amend Section 703.5 to permit mediator testimony in mediation malpractice suits so that the trier of fact has the opportunity to hear all of the evidence? Note, however, that the UMA does not permit the mediator to testify in these suits. In a comment accompanying Section 6(a)(6), the drafters stated that they did so "because of the potential adverse impact on a mediator's appearance of impartiality".

   
And what about the adverse party and that party's attorney? They may have observed the malpractice plaintiff when he or she signed the settlement agreement. Should they be allowed to testify? They can testify about conduct under current jurisprudence and so observation of a feeling of illness (or lack thereof) is admissible. But suppose that the malpractice plaintiff also made comments when the settlement agreement was signed that would indicate that the agreement was signed willingly. Should the defendant in the malpractice suit be deprived of that testimony? Under the UMA, that testimony would be admissible in the malpractice suit. But the California statute would have to be amended to permit such testimony. Would that be a good idea? One of the main purposes of a mediation to buy peace. Certainly, a mediation party who settles a dispute believes that he or she has bought peace. Why should that peace be disturbed?

 
And even if future legislation permits the admissibility of communications between an attorney and client during the course of a mediation but not the testimony of the mediator or the adverse party, those communications may very well include settlement offers by the adverse party and other comments about the adverse party's negotiation strategy. Is that a desirable outcome?

The Cassel decision certainly reinforces the concept that there shall be no judicially created exceptions to mediation confidentiality, but otherwise it raises a lot of questions and not many answers.

************************************************************************ Paul Dubow is a mediator and arbitrator practicing in San Francisco specializing in employment, securities, and business disputes.